No, arbitrage funds are not assured return products. In fact, there is nothing like an assured return product in the markets at all. In reality, you will never get 1.11% return on Reliance each month even if the gap is 1.11% today. There are months when the return could be as low as 0.5% for the full month. Then there is the liquidity issue. Small movement in price ticks will ensure that your actual return may be lower than anticipated. The arbitrage spread between equity and futures is a function of interest rates and the state of the equity markets. For example, if the interest rates in the market go down then the arbitrage spread will also go down as it is ultimately like a debt product. Secondly, if equity markets are lacklustre then the arbitrage spreads may not be too attractive. When all these factors are taken into account, an arbitrage fund typically looks to earn between 8-9% on an annualized basis. Then what is so special about these arbitrage funds?